APAC Morning Update - 23/03/21

Xe Corporate APAC

March 23, 20213 min read

The AUDUSD opens at 0.7754 and the NZDUSD opens at 0.7177

Currency markets got a jolt early yesterday when the Turkish Lira dropped 15% after Turkey’s President fired the head of the Central Bank after the CB had raise interest rates in turkey by 2.00%.
This sparked fears of a run on emerging market currencies but as there was no major follow through during Asia and Europe the US markets largely shrugged off the news. Indonesia looks to be a country and currency to watch as the economy falls deeper into recession and this could lead to a further sharp drop in their currency.

In the USA the housing market data was softer than expected but this might reflect the severe storms back in February. It looks like more stimulus will be coming to the US economy with the Biden administration hinting at a USD 3 Trillion stimulus package, mainly targeted at infrastructure. There is talk of higher taxes for those making more than USD 400k and also talk that the corporate tax rate might rise from the super low 21% that Trump cut it down to.
Ironically longer term interest rates eased overnight possibly reflecting they had gone too far too fast in the short term. However bigger stimulus will lead to bigger deficits and it seems clear that long term US interest rates are headed higher over time. The big ongoing question for markets will be will the coming rise in inflation prove to be transitory? Or will it be more permanent?

In NZ the Ardern Government will announce their big housing package this morning, promising more supply and tougher measures to curb speculation. Talking to people in the industry it appears to be at full capacity so it’s hard to imagine how supply can be ramped up in the short term and the curbs to speculation will most likely be an extension of the bright line test for investors – possibly out to 7 or even 10 years.
In the interim the NZ economy is only growing at around 1.0% as the full effects of the lack of international tourists bites hard in the peak Q1 and Q2 periods.
This will get highlighted in the NZ credit card spending released this afternoon which should show another decline.
Tomorrow we get trade data for both NZ and Australia – with Australia roaring ahead due to iron ore exports to China but NZ trying hard to catch up with booming Dairy exports.


Global equity markets are mixed: Dow -0.7%, S&P 500 +0.7%, FTSE +0.3%, DAX +0.3%, CAC -0.5%, Nikkei -2.1%, Shanghai +1.1%.

Gold prices are off 0.3%, currently trading at $1,745 an ounce. WTI Crude Oil prices are up 0.2% trading at $61.6 a barrel.

NZDUSD 0.7177 0.5%
NZDEUR 0.6010 0.0%
NZDGBP 0.5176 0.5%
NZDJPY 78.08 0.6%
NZDAUD 0.9255 -0.1%
NZDCAD 0.8977 0.3%
GBPNZD 1.9315 -0.3%

NZDUSD 0.7177 0.5%
NZDEUR 0.6010 0.0%
NZDGBP 0.5176 0.5%
NZDJPY 78.08 0.6%
NZDAUD 0.9255 -0.1%
NZDCAD 0.8977 0.3%
GBPNZD 1.9315 -0.3%